KERN: America's economic collapse presents hope for change

America is heading for inevitable economic collapse. How and when, and what good comes from it, is up to us. Photo: Steam Ferry Boat on the Hudson / Historical photo

INDIANAPOLIS, August 12, 2013 — We’ve tried secession, impeachment and assassination to change the course of government. They didn’t work. The only other thing Americans tried that did work ― and it worked, for fourscore and seven years, and change ― was revolution. Most of us are not keen on revolution ― not yet, anyway.

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The only thing that might work would be a new consciousness of the Constitution and its limits. The Supreme Court has expanded federal power beyond any reasonable interpretation of that clearly-written document.

Perhaps we need to somehow “reset” to following the actual, as-written and as-intended Constitution, setting aside all the awful precedents, from McCulloch v Maryland 2 (1819) on down. See Wickard v Filburn3 (1942) or Bennis v Michigan4 (1996) for egregious examples of perverted interpretations. Bennis is at the end of a long string; Wickard is the beginning of another. Or look to Kelo v City of New London5 (2005) for the beginning of the end of private property and investment.

A return to the Constitution won’t come from the ruling class. They have too much at stake to want to get off the gravy train. They have collected too much power to simply give it up. Just as they took power at every opportunity, more power must be denied them; and power must be reclaimed whenever and however possible. In a zero sum game, an enemy’s power destroyed is an friend’s power gained.

A return to the Constitution won’t come from the underclass. Aside from the fact that this large mob is uneducated, much of it depends on the ruling class for its sustenance. Even the educated are members: underemployed millenials, living with their parents and clinging to their useless degrees, with student loans that set them financially behind as much as a mortgage; veterans, who depend on pensions and VA healthcare, special educational benefits, preferences in hiring, and other privileges; government contractors; disabled people; single moms; public school employees; unions; state and local governments that depend on “federal” money; and the enormous bureaucracy, from IRS thugs to NSA snoops, to TSA gropers, OSHA extortionists, FDA obfuscators, and SEC crooks, among countless others in the group that delay, drain, and confuse business, as they “eat out our substance” for their living.

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Mitt Romney got in all sorts of trouble with the media when he said that 47 percent of Americans are on the take. It’s way more than that. So, without the limits of the Constitution in the way of satisfying all these voting blocs, what’s to happen to our Republic?

It will inevitably collapse financially, if not structurally. Greece collapsed, and it has taken some $240 billion to keep her afloat. That’s about what our government gave to just two companies: AIG and GM. Buying Greece would have been a better investment. Our government has borrowed more than four times that every year since President Obama took office.

Lest one counter that, as a percent of our country’s GDP, Greece was in worse shape than the U.S., there are two sufficient arguments against that position: First, understand that the absolute size of the debt is significantly different.

Greece’s debt could be absorbed, albeit under duress, and with some hardship, by the E.U.; America’s debt cannot be absorbed by anyone. Greece’s debt, once in bailout mode, raised interest rates sharply, but to still-historically low rates. America’s debt, to be refinanced ― well, it can’t be refinanced in any practical or legitimate way. Greece’s displacement of capital across Europe’s action as its bailout sopped up investment money that could have gone to, say, progress, hurt the short-term future prosperity of the Continent, and to a lesser extent, the world. But an American bailout would require the displacement of too much of the world’s available wealth.

SEE RELATED: The US Federal Reserve bailout of Europe: Who knew?

Further, the U.S. GDP is a misleading indicator when misused, which it nearly-always is. Politicians point to its growth since 2009, but they fail to note or understand that GDP is driven by government spending, which is a major component of that index. The government’s borrowing and spending a trillion dollars each year raises the GDP by a trillion dollars each year. GDP is not wealth, nor is it any longer a decent or reliable measure of productivity.

So, the final question is, “What happens after the collapse?” Different societies offer different answers. France brought out the guillotine, under the banner of “Liberté, Egalité, Fraternité!” Then France turned to full-continental war. Russia purged millions and kept its people under iron rule for seven decades. When Rome collapsed, it took a thousand years for society to recover. But the American Revolution, brought about by an involved and freedom-seeking populace, led to the greatest progress mankind has ever made.

The world of young George Washington was closer in technology to that of the Roman Empire than to that of Abraham Lincoln. Baloon flight, steam on rails and on the seas, electricity, communications ― all those were unheard-of in the days of British rule over the Colonies. A few more decades, and add telephony, trans-oceanic telegraph, transcontinental rail, controlled flight, the municipal electric grid, mass production, cheap and superior steel and other metals, automobiles, practical diesel and gasoline engines, and the beginnings of nuclear understanding.

The famous people of the pre-income tax century ― Faraday, Watt, McCormick, Bessemer, Colt, Carver, Edison, Bell, Westinghouse, Pasteur, the Curies, to name a few ― were the inventors, the heroes and role models of the day. Most were Americans; all were inspired by the rewards of individual accomplishment. Today our heroes are ― Justin Bieber and Kim Kardashian?

After 1913, progress slowed as the State grew and regulation strangled innovation. Now, a hundred years later, most people can’t name a contemporary inventor of anything, outside perhaps the late Steve Jobs and the retired Bill Gates. And they weren’t inventors in the strict sense.

We must beware the coming collapse, and educate, quickly, in its looming shadow. Only in the United States of America did a revolution result in overall good, and its best effects lasted from George Washington’s time until 1913; its lingering effects maintain our threatened standard of living even today, but only because no other resource-rich nation has chosen to allow its people the freedom once afforded Americans through the Constitution and its mandated small central government.

What happens here after the collapse ―a French or Russian style revolution and decades of bloodshed, starvation, suffering, and war, or an American-style revolution, with a more than a century of double-digit growth in prosperity and the world’s highest standard of living in history as a result ― will hinge on peoples’ appreciation and understanding of the benefits of individual freedom and initiative.

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Tim Kern

Tim Kern taught economics for fifteen years, and discovered that understanding life is easy; it’s recognizing reality that takes practice. He holds a music degree, and later earned an MBA in finance from Northwestern University. He has lived across the US, and now makes his home in Anderson, Indiana.

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